Implications of new ONS methodology for tax policy

Research and development (R&D) has long been recognised as a vital focus for governments seeking to tackle the challenge of increasing productivity with R&D tax relief a key lever in the toolkit to incentivise private sector investment. While the impact of the recently announced changes to the rates of relief for R&D tax will not be known for some time if Rishi Sunak’s approach as chancellor is anything to go by the prime minister will champion the key role of innovation as a driver of growth which he did as recently as March of this year as part of his Mais lecture.

Whatever the approach under Rishi Sunak’s premiership a clear target and the means to measure progress towards it will be essential. For the past five years the government’s sights have been set on investing 2.4% of gross domestic product (GDP) in...